You can use them to make your own dog bed out of old clothes or towels or sheets. Simply buy a Molly Mutt Dog Duvet (they've got a whole range of sizes and styles) and then stuff it with the t-shirts and pillows that you were going to donate to the local thrift store.
It's a pretty cool idea. And the duvets come in so many awesome colors and patterns, they'll actually look good in the corner of the living room.
Images: Molly Mutt